Crypto News Headlines (26-May-2022)

Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), discussed cryptocurrency at the World Economic Forum’s annual meeting in Davos Monday.

She urged people not to completely shun crypto after the recent collapse of algorithmic stablecoin terrausd (UST) and cryptocurrency terra (LUNA), Bloomberg reported. The IMF managing director was quoted as saying:

I would beg you not to pull out of the importance of this world … It offers us all faster service, much lower costs, and more inclusion, but only if we separate apples from oranges and bananas.

The IMF chief stressed that it is the responsibility of regulators worldwide to put up protective measures and adequately educate investors on the risks of crypto assets.

Portugal’s parliament today rejected a proposal to tax Bitcoin and other cryptocurrencies.

At a Wednesday evening budget session, the left-wing parties Bloco de Esquerda and Livre proposed taxing digital assets, but that idea was thrown out, online newspaper ECO reported via its live blog.

The proposal had asked the government to consider taxing crypto profits in excess of €5,000 ($5,340.45).

Portugal has long been considered a cryptocurrency tax haven—proceeds from individual sales of cryptocurrencies have been tax-exempt since 2018.

Also, trading digital assets is not considered investment income in the European nation. Because of this, Lisbon is attractive to crypto startups and events although businesses that accept crypto do have to pay income tax on that revenue.

There has been a change in the thinking of the large crypto investors known as whales. Data shows USD coin (USDC) has become the stablecoin of choice on the Ethereum blockchain, not the larger tether (USDT).

In crypto, whales are the biggest cryptocurrency holders – institutional investors, exchanges, deep-pocketed individuals – who are capable of moving large amounts of tokens and swaying market prices. Analysts closely watch their activity to spot trends and anticipate large price movements.

Data from CoinMetrics, a blockchain analysis firm, shows wallet addresses on the Ethereum blockchain that hold more than $1 million USDC surpassed the number of wallets that hold USDT, still the largest stablecoin by market cap.

“In the current market condition, a lot of people view USDC as the safer, preferred stablecoin,” Edward Moya, trading platform Oanda’s senior market analyst, told CoinDesk.

USDC, the second-largest stablecoin, has been gaining market share since the once-$18 billion UST stablecoin collapsed and USDT’s peg to the dollar wobbled.

The policy body that represents the interests of India’s crypto industry is not planning to file a legal challenge against the Reserve Bank of India (RBI).

“We have no plans to file a contempt of court challenge,” a spokesperson of the Internet and Mobile Association of India (IAMAI) told CoinDesk regarding Coinbase (COIN) CEO Brian Armstrong raising the idea of a legal move against the Reserve Bank of India (RBI).

Tough questions, and good questions, for NPCI and RBI in India. Is their “shadow ban” a violation of the supreme court ruling?— Brian Armstrong – barmstrong.eth (@brian_armstrong) April 25, 2022

Brazil’s Federal Reserve (RFB) has declared that Brazilian investors in the crypto-asset market must pay income tax on transactions that involve the like-kind exchange of cryptocurrencies; for example, Bitcoin (BTC) for Ethereum (ETH).

The RFB’s declaration was published in the Diário Oficial da União and was the result of a consultation made by a citizen of the country to the regulator. At the end of last year, the group issued an opinion in which it claimed that trading between cryptocurrency pairs is taxable even if there is no conversion to the real (Brazil’s national currency).

Although it does not specify what can be understood as “profit,” since in the exchange of one crypto asset for another there is no capital gain in fiat currency, it points out that there is, even so, the obligation to pay taxes on the eventual profit:

“The capital gain calculated on the sale of cryptocurrencies, when one is directly used in the acquisition of another, even if the acquisition cryptocurrency is not previously converted into reais or another fiat currency, is taxed by the individual’s income tax.”

On May 27, a new blockchain will launch that’s based on the Terra blockchain network but does not include an algorithmic stablecoin like terrausd (UST). The old chain token will be called “Luna Classic (LUNC)” and the new token will take the old name “Luna (LUNA).” The Terra team announced the May 27 launch and explained that the governance proposal passed on May 25. According to the team, the latest Terra Core code has been released and the codebase was audited by SCV Security.

The governance decision further details the new LUNA token distribution which includes 30% for the community pool, 35% for pre-attack LUNA holders, 10% for pre-attack aUST holders, post-attack LUNA holders will get 10% and post-attack UST holders are eligible for 15% of the supply. Additionally, the Terra team mentioned that the Terraform Labs wallet, Luna Foundation Guard’s wallet, and the community pool distribution module account will be removed from the LUNA airdrop.

The Terra team’s Twitter thread adds:

The removal of these wallets from the airdrop whitelist will make Terra a fully community-owned chain. We believe this is an important step to empowering our ecosystem.

In the past year, the publicly traded fantasy sports and sports betting company DraftKings has gone hard on crypto—specifically NFTs.

In July, DraftKings launched an NFT marketplace that is the exclusive home of NFTs from Tom Brady’s platform Autograph. The company also offered a CryptoPunk NFT as the prize for a fantasy contest, and in June the company’s three co-founders all wore CryptoPunk T-shirts to ring the opening bell at the Nasdaq.

Might accepting crypto as payment for fantasy contests and betting be next on the roadmap? DraftKings CEO Jason Robins says it’s likely.

“Certainly people want it,” Robins said on the latest episode of Decrypt’s gm podcast. “Certainly within the marketplace, we should be able to do that. So we’re working towards it.”

Circle Internet Financial is arguing that the U.S. Federal Reserve should pass on launching its own digital dollar, arguing that it could strangle private-sector efforts such as Circle’s to manage their own dollar-based tokens.

And Circle, the issuer of the USDC stablecoin, said in a comment letter to the Fed that its token is already meeting “many of the potential benefits” of a central bank digital currency (CBDC) in the U.S.

“A host of companies, including Circle, have leveraged blockchain technology to support trillions of dollars of economic activity with fiat-referenced stablecoins,” the company told the Fed in a letter released Wednesday, meant to respond to the Fed’s invitation to comment on a January report. “The introduction of a CBDC by the Federal Reserve could have a chilling effect on new innovations.”

The stablecoin industry has been suffering collateral damage recently from the ugly collapse of TerraUSD (UST), though that was an algorithmic stablecoin, not one backed by reserves. Boston-based Circle made a case to the Fed that its stablecoin – which ranks second by global market cap – is backed by “cash and short-duration U.S. government obligations” and the company assures the public regularly with attestations about the content of those reserves.

DeFi insurance protocol InsurAce says it was well within its rights to reduce the claims period for people affected by the Terra USD (UST) depeg event from 15 days to seven — but added it has already processed nearly all 173 submitted claims and will pay out $11 million.

InsurAce (INSUR) is the third largest insurance provider for decentralized finance (DeFi) protocols, with a market cap of $15 million.

On May 13, InsurAce caused a stir when it announced it had shortened the claims window for those with cover related to Anchor (ANC), Mirror (MIR), and stablecoin Terra USD (UST) following the collapse of the Terra (LUNA) layer-1 blockchain.

But CMO Dan Thomson told Cointelegraph on Thursday that its move to shorten the claims window for the 234 covers of Terra portfolios was necessary to prevent further losses as UST had dropped to $0.08 by May 13, according to CoinGecko. He added:

“It is in our terms of service to make such changes. We felt there was no point in delaying the process on behalf of those who lost money and stakers who would have to pay out claims.”

A group of former executives of cryptocurrency exchange Binance have created a $100 million venture fund with a focus on the metaverse and bringing greater crypto adoption to emerging markets, Tech Crunch reported on Thursday.

Old Fashion Research was formed by Ling Zhang and Wayne Fu, previously Binance’s vice president of M&A and head of corporate development respectively.

The fund, which was backed by traditional venture capital funds, family offices and angel investors, will focus on the metaverse and crypto adoption in emerging markets like Latin America and Africa.

“We are very Southern Hemisphere-focused,” Zhang said. “We’ll go after all of the emerging markets, but it’s our goal and vision to accelerate adoption there.”

The fund has already invested in over 50 blockchain projects, including a blockchain analytics platform Nansen, trading platform WOO Network and African gaming community Metaverse Magna.

Old Fashion Research was not available for comment at the time of writing.

Despite the troubling conditions that have set in in the crypto markets in recent weeks and months, venture capital does not appear to have been overly spooked. This week Andreessen Horowitz (a16z) formed its fourth fund to invest in crypto companies worth $4.5 billion, more than double the size of its third raised nearly a year ago.